Global Markets:

  • Asian stock markets: Nikkei up 2.70 %, Shanghai Composite down 0.20 %, Hang Seng up 0.10 %, ASX up 0.20 %
  • Commodities: Gold at $1666 (-0.30 %), Silver at $15.95 (-1.50 %), Crude Oil at $78.18 (-0.80 %)
  • Rates: US 10 year yield at 2.334, UK 10 year yield at 2.268, German 10 year yield at 0.850

News & Data:

  • RBA Interest Rate Decision 2.50 %, Expected: 2.50 %, Previous: 2.50 %
  • Australia Retail Sales m/m 1.2 %, Expected: 0.4 %, Previous: 0.1 %
  • Australia Trade Balance A$-2.26bln, Expected: A$-1.95bln, Previous: A$-1.01bln
  • Japan Manufacturing PMI 52.4, Previous: 51.7

Markets Overview:

USD/JPY took out the 114.00 level in yesterday’s NY session, after the ISM Manufacturing PMI beat expectations, but failed to sustain momentum above there. Japanese names were sellers overnight and specs decided it might be good to book some profits, as the pair has gained almost 500 pips since the BoJ announcement. Bids reported into 113.00 and 112.80. To the topside, intraday resistance at 113.80 and then 114.20, but the charts suggest no serious tech resistance until 114.66 (Dec 27 high) and then 115.00.

AUD/USD declined as the ABS (Australian Bureau of Statistics) revised employment figures for the month of September. The employment change number was revised to -23.7k vs -29.7k previous and the unemployment rate to 6.2 % vs 6.1 % previously. Selling from algos and fast money names drove the pair to 0.8644, but it bounced back quickly as the Retail Sales number were good (1.2 % vs 0.4 % expected). The RBA left rates unchanged and there were no surprises in the statement. Dealers saw some short covering from specs as the bank maintained their neutral bias despite weaker econ data out of Australia in the past few weeks.

EUR/USD rose above 1.2520, triggering some stops on the way to 1.2530. EUR sentiment remains bearish, but the risk is high that bears might get disappointed again by Draghi on Thursday, so further position covering ahead of the ECB meeting on Thursday is possible. Solid offers into 1.2550, but large stops resting above. Key tech resistance at 1.2590 and then 1.2630.

Upcoming Events:

  • 09:30 GMT – UK Construction PMI (63.5)
  • 10:00 GMT – Euro Zone PPI (-1.5 % YoY)
  • 13:30 GMT – US Trade Balance ($-40.0bln)
  • 13:30 GMT – Canadian Trade Balance
  • 15:00 GMT – US Factory Orders (-0.6 % MoM)
  • 21:45 GMT – New Zealand Employment Change (0.7 % QoQ)
  • 21:45 GMT – New Zealand Unemployment Rate (5.4 %)